Trading AMD’s Q4 results: technical overview and trading strategies

From a technical standpoint, prices have moved above their weekly short-term moving averages (MA), but have yet to cross their long-term MA’s with the 200-week not that far off. It recently pulled out of its longer-term bear trend channel (red shaded in the image above) the start of which was off its highs in November of 2021 as the tech sector suffered heavily in 2022, and the lift-off of last October’s lows (after its preliminary third-quarter earnings release hit the wires) consolidatory with slight positive technical bias.

The daily time frame is showing a bit more positive technical bias though we’ve had a strong movement for the tech sector outperforming in general for over a week now. Prices are near the upper end of its daily Bollinger Band, and when it comes to its DMI (Directional Movement Index) showing a small positive margin between +DI and -DI.

Zooming out to the weekly time frame however, it still has quite a bit of climbing to do to tilt a few key technical indicators, with a -DI still above its +DI thus far, and an ADX (Average Directional Index) reading no longer in trending territory.

Summing up the overview on the longer-term weekly time frame and it’s a weak bear average where prices have managed to recover at times and oscillations weakening some indicators, but we're getting out of its bear channel meaning it’ll need less to shift to a more consolidatory overview provided the intraweek moves remain relatively contained.

What it also means from a strategic standpoint is that conformist strategies are sell and contrarians buy, but with far more caution for the former when it comes to selling off its weekly 1st Resistance level, doing so only after a significant reversal if it comes to pass.

Those expecting upside bias and further risk-on or especially ‘buy-everything’ moves can entertain contrarian buy-breakouts off the weekly 1st Resistance level or buy-after-reversals after its 1st Support, and more so for those expecting the worst with regards to its bear overview has passed.

A reminder that when it comes to fundamental events – chief amongst them earnings – that technicals will hold less relevance and levels are far less likely to hold once the figures are released, last time around its share prices rose as much as 6% when third quarter numbers hit the wires at the beginning of October.

IG Client sentiment* and short interest for AMD shares

In what is usually the case with most single stocks, the bias was and remains extreme amongst for retail traders, at 92% near the beginning of this month and since then rising further to 95% as of the start of this week.

As for short interest, it’s been hovering largely within the 30m-40m range since March of last year, with the latest reading 32.3m shares that represent 2% of shares, a slightly higher percentage than most of its larger rivals (source: Refinitiv).

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 9am for the outer circle. Inner circle is from the 5th of January 2023.